It’s that time of year when retail investors are bombarded by a flood of data. While the nation awaits the official kickoff of the holiday shopping season on Black Friday — which is just more than a week away — Wall Street is sifting through a deluge of quarterly reports.

Already this week, we have seen a parade of specialty retailers, including TJX Companies (NYSE:TJX) and Saks (NYSE:SKS), and now heavy hitters like Target (NYSE:TGT) and Walmart (NYSE:WMT) are on deck.

Both of these retailing giants are slated to release their respective quarterly reports ahead of the open Thursday morning, and investors will be keeping a close eye out for any signs that this duo is concerned about the effect Hurricane Sandy will have on holiday shopping forecasts.

Walmart Options

Starting with the world’s largest retailer, Walmart is expected to report a 10% rise in third-quarter earnings to $1.07 per share, with the company continuing to benefit from cost-conscious shoppers. Sales are seen rising 4.4% to $115 billion.

Behind the scenes, sentiment is a bit mixed within the brokerage community.

For instance, EarningsWhisper.com reports that Walmart’s third-quarter whisper number arrives at $1.09 per share, 2 cents higher than the consensus. However, data from Thomson/First Call reveals that 16 of the 28 analysts following WMT rate the shares a hold or worse, while the average 12-month price target rests at $81 — a very modest premium of about 13% to Tuesday’s close.

Options traders appear to have chosen to lean toward the bearish side, with WMT’s November/December put/call open interest ratio arriving at 1.05. The majority of this put open interest resides at the 72.50 and 75 strikes in the November series, where about 11,000 contracts reside at each strike, as well as the December 65, 67.50 and 70 strikes, which sport roughly 13,000, 15,000 and 11,000 contracts, respectively

On the call side, open interest is heavily concentrated at the deep out-of-the-money November 77.50 strike (13,200 contracts), the December 72.50 strike (17,900 contracts) and the December 75 strike (24,500 contracts).

For those looking to pile in on either the call or put side, November implieds are pricing in a roughly 3.6% post-earnings move. Despite the stock’s recent breakdown, which has mirrored a retreat in the broader market, WMT is approaching oversold territory as well as technical support in the 70-71 area. Combine this with lingering pessimism in the stock’s sentiment backdrop, and we have the makings for a potential contrarian options play.

With WMT trading just below $72, a December 70/72.50 bull call spread could be well positioned to profit from a positive reaction to tomorrow’s earnings report. This trade was offered at $1.59, or $159 per pair of contracts, at the close on Tuesday, placing breakeven at $71.59.

A maximum profit of 91 cents, or $91 per pair of contracts, is achievable if WMT closes at or above $72.50 when December options expire.

Target Options

Target is expected to post a 5% year-over-year drop in third-quarter earnings to 78 cents per share, though sales are expected to rise 3.2% to $16.93 billion.

Compared to Walmart, optimism is a bit more clearly defined for Target. Specifically, Earnings Whisper reports a third-quarter whisper number of 85 cents per share (7 cents above the consensus), while Thomson/First Call data reveals 14 buys and 10 holds with nary a sell rating to be found.

Options activity also is skewed more toward the bullish end of the spectrum, with TGT’s November/December put/call open interest ratio arriving at 0.75. Drilling down, we find that options traders are focusing heavily on the 65 and 62.50 strike in both the November (2,900 contracts and 3,800 contracts, respectively) and December series (2,000 contracts and 2,700 contracts, respectively).

Meanwhile, put traders are focused on the November 60 strike (2,600 contracts), the November 62.50 strike (2,300 contracts) and the December 60 strike (3,200 contracts).

November implieds are pricing in a post-earnings move of about 4% for TGT, placing the 60 and 62.50 strikes well within reach. With sentiment hinting at excess levels of optimism for Target, this retailer also might be primed for a contrarian play — this time to the downside.

Specifically, the December 62.50/60 bear put spread was offered at $1.12, or $112 per pair of contracts. Breakeven on this trade rests at $61.38 — a decline of only about 1% from Tuesday’s close — while a maximum profit of $1.38, or $$138 per pair of contracts, is possible if TGT closes at or below $60 when December options expire.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.